non-OECD Countries Research Articles

Robotic capital - skill complementarity

Abstract Relying upon an original (country-sector-year) measure of robotic capital ( $RK$ ), we investigate the degree of complementarity/substitutability between robots and workers at different skill levels. We employ nonparametric methods to estimate elasticity of substitution patterns between $RK$ and skilled/unskilled labor over the period 1995–2009. We show that: i) on average, $RK$ exhibits less substitutability with skilled workers compared to unskilled workers, indicating a phenomenon of “RK-Skill complementarity”. This pattern holds in a global context characterized by significant heterogeneity; ii) the dynamic of “RK-Skill complementarity” has increased since the early 2000s; iii) the observed strengthening is more prominent in OECD countries, as opposed to non-OECD countries, and in the Manufacturing sector, compared to non-Manufacturing industries.

Analyzing the Lange–Lerner Hypothesis: is a monopolized banking sector a threat to democracy?

Is a monopolized banking sector a threat to democracy? Increasing bank monopolization and its growing share of the economy have brought renewed interest to this historical concern. Oskar Lange and Abba Lerner held that banking monopolization would undermine democracy through the concentration of political power among banking elites. This led them to exclude the banking sector from their more general support for private ownership of the means of production. We examine whether banking monopolization is associated with concentrated political power and the undermining of democracy using the Lerner Index (based on Lerner’s measure of banking concentration), Polity scores, Varieties of Democracy’s (V-Dem’s) Political Civil Liberty Index, and V-Dem’s Power Distributed by Socioeconomic Position Index, comprising data for 101 countries from 1996 to 2014 in our full specification. We find no relationship between civil liberties and the banking sector in Organisation for Economic Co-operation and Development (OECD) countries but a negative and statistically significant relationship in non-OECD countries. We find no relationship between the Lerner Index and the concentration of power by socioeconomic status. Our results support only one variant of the Lange–Lerner Hypothesis and only among non-OECD countries. We argue that, most likely, this is because long-established democracies are more resilient.

Financial development and tax evasion: International evidence from OECD and non-OECD countries

This study investigates the nexus between financial development and tax evasion across 156 countries from 2000 to 2017. In contrast to previous research focusing solely on banks or financial markets’ development, we employ a more comprehensive financial development index introduced by the International Monetary Fund (IMF) in 2016. This index gauges the progress of financial institutions (FI) and financial markets (FM) in terms of depth, access, and efficiency. Our findings underscore a negative correlation between financial development and tax evasion. Enhanced depth, access, and efficiency in both FI and FM correspond to reduced levels of tax evasion. Nevertheless, disparities emerge between the Organization of Economic Cooperation and Development (OECD) and non-OECD countries. While non-OECD countries exhibit negative associations between FI and FM development and tax evasion, in OECD countries, the role of FI assumes greater significance in curtailing tax evasion. Notably, within OECD countries, the depth of FI and FM emerges as the sole influential factor. This contrasts starkly with non-OECD counterparts, where all dimensions − depth, access, and efficiency − negatively influence tax evasion. Our research has noteworthy implications for policymakers in both categories of countries.

Social Cost of Carbon as an International Benchmark to Drive Countries’ Carbon Pricing during the Transition

Building on updated estimates of the social cost of carbon obtained from the most recent literature, this article proposes a social cost of carbon-based benchmark for carbon pricing to drive world countries’ carbon pricing policies up to 2050, consistent with the Paris Agreement targets. By using a dataset on net effective carbon rates developed by the Organisation for Economic Co-operation and Development (OECD), we firstly compare both explicit and implicit carbon pricing in 2021 in 71 OECD and non-OECD countries with the social cost of carbon benchmark for 2021 and calculate the degree of internalization of the social cost of carbon averagely related to their carbon pricing instruments. We find that there is a serious gap in current climate policies, which are far from creating optimal pricing conditions to reduce global emissions to levels needed by the Paris Agreement. The economic and distributional feasibility of a full implementation of the carbon pricing benchmark is tested in the same set of countries using two indicators, which are calculated for 2025, 2030, 2040 and 2050. Since the test results are income-regressive among income country groups, benchmark implementation by countries within the cooperative approaches of Paris Agreement art. 6 should be accompanied by the creation of an international cooperative fund aimed to recycle at least part of the revenues collected by high-income countries to compensate affected population in lower-income countries.

Impact of urbanization and human development on ecological footprints in OECD and non-OECD countries

Ecological footprints play a crucial role in assessing how human activities impact the environment, serving as key indicators. This study investigates the influence of urbanization and human development controlling for GDP and industrialization on ecological footprints, focusing on both OECD and non-OECD countries during the period from 1990 to 2018. The investigation employs an open-access solution framework and utilizes the Generalized Method of Moments approach for analysis. The findings highlight distinct patterns between OECD and non-OECD countries. In OECD countries, ecological footprints are increasing with urbanization and GDP growth while showcasing a negative impact of the Human Development Index (HDI) and industrialization on ecological footprint. Conversely, non-OECD countries demonstrate a positive impact of GDP and HDI on ecological footprints, while there is a negative impact of industrialization and urbanization on ecological footprints. These disparities underscore the need for tailored environmental strategies based on a country's economic and developmental status. The results underscore the importance of investing in the renewable energy sector and implementing stringent environmental policies to mitigate the environmental impact of human activities. This evidence reinforces the urgency for countries, irrespective of their OECD status, to take proactive measures to safeguard the planet from further environmental hazards.

Threatening the Poor? The economic impacts of carbon border adjustment mechanism on developing countries

It is highly necessary to conduct a more detailed assessment of the economic impacts caused by the Carbon Border Adjustment Mechanism (CBAM), especially for numerous developing countries. This study utilizes the input-output (IO) model to evaluate the inequality consequence of CBAM. Results indicate that 1) the overall impact of output decline and production cost increase on non-OECD countries is greater than that on OECD countries; 2) regionally, African countries experience a more severe output decline, while Asian countries see a higher increase in production costs. Apart from BRICS, other developing countries demonstrate low reduction efficiency; 3) a refund mechanism based on historical emission responsibility results in larger benefits for the LDCs. Conversely, green innovation contribution and emission reduction efforts primarily benefit developed economies and large developing countries. We recommend 1) prioritizing assessments for developing countries before designing cross-border climate policy; 2) considering both fairness and efficiency when designing a refund mechanism.

Impact of Urbanization on Carbon Dioxide Emissions—Evidence from 136 Countries and Regions

Urbanization affects economic production activities and energy demand, as well as lifestyle and consumption behavior, affecting carbon dioxide emissions. This study constructs the System Generalized Method of Moments (Sys-GMM) model of the impact of urbanization rate on carbon dioxide emissions based on panel data of 136 countries and regions in the world from 1990 to 2020, grounded on the extended Stochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) model. This study found that (1) there is a negative relationship between urbanization rate and CO2 emissions from 1990 to 2020. (2) The impact of the urbanization rate on CO2 emissions is heterogeneous. An increase in urbanization rate in non-OECD countries significantly reduces CO2 emissions, while the effect is not significant in OECD countries. (3) The carbon intensity of fossil energy consumption moderates the relationship between urbanization rate and CO2 emissions, weakening the effect of urbanization rate on CO2 emissions. Based on these findings, policy recommendations such as promoting urbanization and increasing the regulation and control of fossil energy carbon intensity are proposed.

Historical characteristics and projection of global renewable energy consumption

Although renewable energy consumption (REC) is increasingly crucial for addressing climate change and existing literature focused on REC from various perspectives, the historical characteristics (i.e., convergence, inequality and driver) and prospective trajectory of REC are not well assessed especially at global scale, hindering the policy implications towards sustainable development. Therefore, the study presented an in-depth investigation on the historical characteristics above and projection of REC covering 39 countries over 1990–2020 using log t convergence model, Gini coefficient decomposition model, generalized Divisia index model and machine learning forecasting models, respectively. The results indicated that, first, historical tendency of global REC was recognized with two convergence clubs and divergent countries (the USA and China). Second, Gini coefficient of global REC is increasing where regional rank is the primary driver especially from the intra-inequality of non-OECD countries. Third, GDP seems to be the predominant drivers of the global REC, especially for most non-OECD countries. Forth, countries will make advancements in REC in the coming decades, with enduring trends. Consequently, collaborative efforts and concerted actions among nations in REC development are deemed essential to foster a more sustainable and equitable REC development pattern, contributing to the realization of sustainable development goals.

Bank runs and media freedom: What you don’t know won’t hurt you?

This paper examines the influence of media freedom restrictions on retail depositor behavior during banking crises. Non-professional, retail depositors are particularly affected due to insufficient access to vital information about the banking industry's vulnerability and broad macroeconomic conditions amidst the crisis. Using data from 85 countries from 2004 to 2019, we found that during crises, higher media restrictions lead to an increase in the rate of household deposit withdrawals. If media restrictions hinder depositors from accurately assessing the banking sector’s exposure, there is a higher likelihood of panic-based response in uncertain times brought on by the banking crisis, potentially triggering bank runs. Furthermore, our results reveal that lower banking sector risk can mitigate the negative effect of media restrictions on retail deposit growth during a banking crisis, especially in middle-income OECD and non-OECD countries, countries with stronger institutional environments, and countries with higher financial literacy. As a policy suggestion, promoting financial literacy could help reduce information asymmetry and prevent panic withdrawals, even in environments with significant media restrictions.

WITHDRAWN: Overseas Operations and Corporate Financial Asset Allocation

Using Chinese listed companies’ data from the 2008–2018 period, this study investigates the impact of overseas operations, proxied by overseas subsidiaries, on financial asset allocation. The results show that, first, in general, enterprises that participate in overseas operations have a higher level of financial asset allocation. Second, heterogeneity analysis at the micro level shows that overseas operations promote both hedged and non-hedged financial assets. The relationship between overseas operations and financial asset allocation mainly exists when the parent company faces more serious financing constraints, no overseas returned executives are present in the parent company, overseas subsidiaries have inconsistent business with the parent, and overseas subsidiaries experience losses. Third, heterogeneity analysis at the macro level shows that compared with overseas operations in Organization for Economic Co-operation and Development (OECD) countries, overseas operations in non-OECD countries have a higher level of financial asset allocation. Furthermore, compared with overseas operations in non-Belt and Road countries, overseas operations in Belt and Road countries have a higher level of financial asset allocation. Overseas operations mainly play a role in promoting financial asset allocation in cases of high economic risk, high political risk, and numerous investment opportunities in areas where overseas operations are located. Fourth, financial asset allocation is beneficial for reducing cash flow fluctuations and operational risk of multinational enterprises, and acts like a reservoir. This study advances research on the determinants of financial asset allocation from the unique perspective of the overseas investment channel, which provides some implications for the Chinese government on its “Go Global” and Belt and Road strategies and realizing financial development to serve the Chinese economy.

The broadening of international education in the twenty-first century

ABSTRACT The share of international students studying in traditionally major hosts fell from 63% in 1999 to 40% by 2019, while the shares of other countries grew. What are the primary factors behind the broadening of international education? I extend the small literature on the flow of international students into non-OECD countries by better measuring relative university system quality. This is found to be a driver of international enrollments for non-OECD and non-English-speaking OECD host countries. The results suggest that economic growth and rising university quality are behind the broadening of international education to a wider variety of host countries.

Participation in global value chains and M&A flows

Abstract This study investigates whether companies operating in industrial sectors characterized by a higher participation in global value chains (GVC) are more likely to be involved in cross-border mergers and acquisitions (M&A). We focus on firms acquired in the EU27 during the period 2008–2020 implementing a gravity model. Results show that cross-border investments are indeed associated with sectoral GVC participation, in particular the dependence on intermediates supplied by other countries (i.e., backward GVC participation) of the target country-sector, which is positively correlated with M&A flows. This evidence is confirmed when the acquired firm operates in high-tech sectors, and when the investor is based in OECD countries. In addition, we find that companies from non-OECD countries supplying inputs to other countries (i.e., higher forward GVC participation) are more likely to pursue a cross-border acquisition.

Do renewable energy investment and financial development mitigate climate change?

This research explores how renewable energy investment and financial development affect climate change using panel data of 26 OECD countries and 18 non-OECD countries from 1996 to 2019. Several conclusions are drawn from empirical analysis. First, there exist cointegration relationships among renewable energy investment, financial development, and climate change. Second, the effects of renewable energy investment and financial development on climate change exhibit heterogeneity. In the full sample and for OECD countries, renewable energy investment and financial development have a negative impact on climate change, while for non-OECD countries, renewable energy investment has a positive impact on climate change.

Information communication technology and manufacturing industry exports based on technology intensity in OECD and non-OECD countries

Studies on the effect of Information and Communication Technology (ICT) on the export of the manufacturing industry, as disaggregated into the low-, medium-, and high-technology intensity, were lacking. However, the trade impact of ICT is mixed and relies on countries’ development and adoption of technology. To this end, this study explicitly contributes to this strand of literature. By using some key and popular ICT indicators we examined the comparative influence of ICT on the manufacturing industry exports defined by their technology intensity/adoption in OECD and non-OECD countries. A panel data technique with the PPML (Pseudo-Poisson Maximum Likelihood) covering the period 2010–2018 was applied for the analysis. Our empirical strategy indicates that internet use only promotes manufacturing exports of high-technology intensity in OECD countries. Low-technology intensity manufacturing exports were negatively affected by an increase in the use of the internet in all the samples of non-OECD and OECD economies. Except for high-technology, an increase in mobile phone subscribers is associated with increased manufacturing exports in all categories of industries and all sample countries. Broadband subscriptions only positively affect exports of low-technology intensity in OECD countries and negatively affect exports of medium-technology in non-OECD countries. The economic complexity index shows a positive influence on exports in OECD and non-OECD countries except for low-technology intensity. Human capital has been found to influence manufacturing exports in OECD countries and reduce exports in non-OECD countries. In both the OECD and non-OECD countries, positive and significant effects of GDP and trade were observed in all categories of technology adoption. These findings imply that in OECD and non-OECD countries ICT is an important aspect worth considering in trade policy making due to its significant influence on exports. ICT services need to be checked by the government to ensure quality, efficient, and effective delivery for better export. Findings also support the practical significance of ICT especially in developing OECD countries.

How Important is Mobile Broadband Latency for Total Factor Productivity Growth?

This paper investigates the relationship between the log change in mobile broadband latency and total factor productivity (TFP) growth based on data for 130 countries. It finds that there is a strong negative correlation between TFP growth and one year lag of latency growth in OECD countries. The interpretation of the findings is that a 10 percentage points decrease in the growth of latency in period t-1 is associated with an increase of 0.3 percentage points in TFP growth. The findings are in accordance with the framework of General Purpose Technologies that suggests that the impact of new technologies often appear with a lag. Moreover, no relationship is found for the total sample or for non-OECD countries. One possible explanation could be that OECD countries have reached a higher maturity in digitalisation and automation in production processes and thus are able to take advantage of the benefits of lower latency.

Causes of Restrictiveness Policies on Foreign Direct Investment in OECD and Non-OECD Countries

Foreign direct investment (FDI) is considered a significant tool to transform modern technologies and innovation from developed to developing countries. Unfortunately, some countries impose FDI restrictions for economic, political, and social reasons. The present study assesses the role of different restrictive policies on FDI inflows in OECD and non-OECD countries. The empirical results are estimated by using panel quantile regression (PQR) at the median quantile from 1998 to 2022. It uses the all-restrictiveness policies index and its four subtypes: equity, key foreign personnel, screening and approval, and operational restrictions; the data is extracted from the OECD database. The study concluded that all restrictiveness policy indexes and their subtypes in OECD countries propose the inverted U-shaped curve. In contrast, in non-OECD countries, it shows the U-shaped relationship to determine the FDI inflows. Furthermore, this study also examines the individual countries using the marginal effect. In OECD countries, Australia, Canada, Mexico, and New Zealand have imposed higher restrictions, which reduces the FDI, while in non-OECD countries case, China, Indonesia, Malaysia, and the Philippines imposed higher restrictions, which increased FDI inflows. This study recommends that OECD countries reduce the FDI restrictiveness policies while non-OECD countries should increase it.

Oscillation Effects of Innovation on Employment

On the cusp of a promising era of technological progress and innovation that seeks to deeply alter the essence of employment, recent research indicates that there is no straightforward answer to how these changes will affect the total labour force. This study endeavours to clarify the complex oscillations between these forces. It employs a robust methodological fusion of theoretical frameworks and empirical scrutiny to dissect the innovation-employment nexus within both OECD and non-OECD economies. A dynamic regression model was utilized, integrating employment variables through the total labour force, and innovation metrics through the Innovation Program 5 for OECD countries, along with the Patent Cooperation Treaty for non-OECD countries. The analysis favoured the robust two-step SYS-GMM estimator over various estimations, including the DIF-GMM, uncovering a positive relationship effect between innovation and employment. Specifically, the study reveals that the IP5 exerts a significant positive effect on the labour force within OECD countries, endorsing the labour-friendly nature of innovation. Conversely, the PCT demonstrates a marked beneficial effect on employment in non-OECD countries. These insights shed light on the nuanced and favourable interplay between innovation and employment across diverse economies, accentuating the temporal and interdependent nature of their association. The need for in-depth knowledge of innovation and its specific effects on employment is crucial for policy-makers. This entails the development of tailored policies and strategic plans intended for the patenting and exploiting innovations aiming at strengthening employment in its economic environment, in specific business environments and taking account of temporal and contextual factors.

Both de-growth and a-growth to achieve strong and weak sustainability: a theoretical model, empirical results, and some ethical insights

This study conceptually characterizes and theoretically represents the four main sustainability paradigms (strong sustainability, weak sustainability, de-growth, and a-growth) in terms of equality and inequality. It then applies these conditions to developed and less-developed countries (OECD and non-OECD countries) and empirically shows that the change in production technology (∆θ) required by a-growth is impossible and the change in consumption preferences (∆α) required by de-growth is unfeasible. Finally, it combines a-growth and de-growth in a theoretical solution for the relationship between ∆α and ∆θ that meets the conditions required by both strong and weak sustainability (parameters are the world’s population, consumption preferences, and production technologies or concerns for nature and future generations in developed and less-developed countries) and empirically demonstrates that this solution is feasible. In particular, sustainability turns out to be an ethical issue more than a technological issue, and the ethical concern for nature turns out to be more favorable than the ethical concern for future generations. Ethical assumptions and implications of the four main sustainability paradigms are highlighted and ethical assumptions and implications of the combined theoretical model are discussed. In particular, intergenerational efficiency is achieved in terms of welfare, and intergenerational equity is achieved in terms of environmental status.

Determinants of Economic Growth: A Granger Causality Analysis

ABSTRACT: Countries devote a lot of time and effort to develop economically, but they nevertheless struggle to attain that growth consistently. Research into economic growth should have provided some guidance as to which actions these countries should adopt, but multiple studies using different methods and datasets generally have led to an array of outcomes that contradict one another. However, Granger causality analysis can provide better insight into the relationship between some key variables and economic growth to give these countries more direction. Granger causality results establish a stronger connection between variables, even though they do not depict true causation. We therefore use a Vector Auto Regression method with Generalized Method of Moments estimation and then Granger-causality to discover how commonly used variables in the literature individually impact economic growth and in what way for a selection of OECD and non-OECD countries. We choose government expenditure, foreign direct investment (FDI), education (as a proxy for human capital), population growth, urbanization, and trade openness as our variables of interest. We also utilize updated datasets from the World Development Indicators (WDI) ranging from the years 2000-2016, based on the availability of the data. We find that FDI and population growth do Granger-cause economic development for OECD countries but that government expenditures, education, urbanization, and trade openness do not show such Granger causality. However economic growth Granger-causes government expenditures, FDI, and education for these OECD countries. For the non-OECD countries, we find that FDI, population growth, and trade openness Granger-cause growth but Granger causality does not occur from government expenditure, education, and urbanization to economic development. Yet similar to the OECD countries, economic growth does Granger-cause FDI and trade openness for the non-OECD countries as well. The overall results indicate that all countries should encourage the expansion of foreign direct investment to grow their economy, which then in turn can lead to additional investment as well as more resources available for the country as a whole. We also suggest further studies should focus on the economic development of individual countries rather than regions, particularly in terms of how technology can drive growth and impact these other variables.

Nonparametric modal regression with mixed variables and application to analyze the GDP data

Modal regression is as efficient as mean regression when the random error follows normal distribution, and is robust to the presence of outliers or skewed distributions. Due to such advantages as efficiency and robustness, it has been widely applied in different fields, such as medicine, economics, environment and so on. However, most existing literature based on modal regression are assumed that the covariates are continuous, but discrete variable is very common in practice. In this paper, inspired by the idea of modal regression, an adaptive estimation procedure is proposed for nonparametric models with mixed discrete and continuous regressors. Under some mild assumptions, the limiting behavior of the proposed approach can be established, and a simply feasible estimation algorithm is provided in practice. To illustrate the performance of our proposed method, some numerical results are presented in simulation part. Finally, the proposed method is applied to analyze the GDP data of OECD and non-OECD countries.